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The Origins of American Land-Grant Railroad Rates

Published online by Cambridge University Press:  11 June 2012

Robert M. Sutton
Robert M. Sutton
Affiliation:
Professor of History, University of Illinois
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Abstract

The pragmatic origins of government policy toward business are well illustrated in this study of the reduced-rate provisions granted to certain American railroads during the 19th century.

Type
Research Article
Information
Business History Review , Volume 40 , Issue 1 , Spring 1966 , pp. 66 - 76
Copyright
Copyright © The President and Fellows of Harvard College 1966

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References

1 U.S. Statutes at Large, 79 Cong., 1 Sess., LIX, Part 1, 606–607. The legislation became effective on October 1, 1946.

2 The new interest in the land-grant question was touched off by Henry, Robert S.'s article, “The Railroad Land Grant Legend in American History Texts,” MVHR, XXXII (Sept., 1945), 171–94.Google Scholar Henry's article aroused considerable interest and comment, as well as rebuttal, and a series of replies were published in MVHR, XXXII (March, 1946), 557–76. Henry's reply is found in ibid., XXXIII (June, 1946), 115–20.

As evidence of continuing interest in the subject, and particularly valuable for the insight which they offer on the admittedly complicated subject of the railroad land grants, the following items deserve mention: Kenny, Norris, “The Transportation of Government Property and Troops over Land Grant Railroads,” Journal of Land and Public Utility Economics, IX (November, 1933), 368–81CrossRefGoogle Scholar; David M. Ellis, “Railroad Land Grant Rates, 1850–1945,” ibid., XXI (August, 1945), 207–222; Ellis, , “The Forfeiture of Railroad Land Grants, 1867–1894,” MVHR, XXXIII (June, 1946), 27–60Google Scholar; Charles S. Morgan, “Problems in the Appraisal of the Railroad Land Grants,” ibid., XXXIII (December, 1946), 443–54; See also: Journal of Economic History, XIV (Spring, 1954), 143–46; AHR, LIX (July, 1954), 952.

3 Haney, L. H., A Congressional History of Railways in the United States, 1850–1887 (Madison, 1910), 34–38.Google Scholar

4 The quotation above is from the grant to Illinois in behalf of the Illinois and Michigan Canal, March 2, 1827. U.S. Statutes at Large, IV, 234. See also: Congressional Globe, 38 Cong., 2 Sess., 891.

5 Huse v. Glover, 119 U.S., 543, 548.

6 U.S. Statutes at Large, IX, 466.

7 Ibid. See also: Documents Relating to the Organization of the Illinois Central Railroad Company (New York, 1851), 3, 18.

8 The Illinois Central Railroad bad been involved in a sharp dispute with the federal government over the handling of the mails during 1854–1856. The railroad felt the compensation offered was too low, while the government charged that the company was refusing to be governed by the Post Office Department, and was failing to conform to the schedules provided for the transportation of the mails. Details may be found in Senate Executive Documents, 34 Cong., 1 Sess., Nos. 39 and 48. In the end, neither party had sought redress in the courts.

9 The United States Army in 1860 numbered only 17,113 officers and men. Weigley, R. F., Quartermaster General of the Union Army: A Biography of M. C. Meigs (New York, 1959), 3–4.Google Scholar See also Williams, K. P., Lincoln Finds a General: A Military Study of the Civil War (5 vols., New York, 1949–1959), I, 62.Google Scholar

10 Cong. Globe, 38 Cong., 2 Sess., 893.

11 Haney, 34–38.

12 Writing to President Osborn, Arthur admitted that the right “to collect anything for carrying United States troops and supplies is a point gained,” but added, “I think we will be able to get full rates.” Arthur to Osborn, August 19, 1861, “In Letters-Miscellaneous File,” Illinois Central Manuscripts, Newberry Library, Chicago, III.

13 Banks to Osborn, April 17, 1861. “In Letters-Misc. File,” 111. Cent. Mss.

14 Cong. Globe, 38 Cong., 2 Sess., 892.

15 Osborn to Cameron, April 26, 1861, “In Letters-Misc. File,” 111. Cent. Mss. The War of the Rebellion: A Compilation of the Official Records of the Union and Confederate Armies, Series III, I, 121–22. Hereafter cited as Off. Ree; all references are to Series III.

16 Cameron to Osborn, May 2, 1861, Off. Rec, I, 144.

17 Sutton, R. M., “The Illinois Central: Thoroughfare for Freedom,” Civil War History, VII (September, 1961), 273–87.CrossRefGoogle ScholarPitkin, W. A., “When Cairo was Saved for the Union,” Journal of the Illinois State Historical Society, LI (Springfield, 1958), 284–305.Google Scholar

18 Cameron to Osbom, August 15, 1861, “Osborn Letter Book,” 133–34, 111. Cent. Mss. Also, National Archives – War Records Division, Quartermaster General's Records, Military Book 45, 301–02.

19 Ibid.

20 Cameron to Fremont, August 15, 1861, Quartermaster General's Records, Military Book 45, 301.

21 Osborn to Cameron, August 17, 1861, “Osborn Letter Book,” 135, III. Cent. Mss.

22 Ibid. In his notification to Fremont, Cameron had specified that preference must be given to military traffic, but that he (Fremont) should not interfere with the operation of the line.

23 A fairly vocal segment of the Congress of the United States was never reconciled to the August 15, 1861, announcement. The alleged obligation of the land-grant railroads to provide free transportation was argued again and again throughout the war and thereafter, and the lines most directly affected were understandably sensitive to these attacks. On one occasion President Osborn complained, “I for one do not wish officially – or personally – to make one dollar out of the government in this war, but the necessity of maintaining this thoroughfare to the river is urgent – it must be done.” (Osborn to Douglas, January 23, 1862, 111. Cent. Mss.)

The long-standing question came to final issue when, in June, 1874, Congress acted to require free transportation without compensation from the land grant lines. (U.S. Statutes at Large, XVIII, 74) The companies appealed an adverse decision of the Court of Claims to the U.S. Supreme Court which in 1877 reversed the earlier decision by a five to four division. In its decision the Supreme Court held that the “free from any toll or other charge” provision secured to the government the free use of the road, but did not entitle it to have its troops or property transported over the line at the expense of the railroad company. While recognizing the “public highway” character of the railroad, the court refused to extend that definition to include the rolling stock or other personal property of the railroad. See Lake Superior and Mississippi Railroad Co. v. United States, and Atchison, Topeka, and Santa Fe Railroad Co. v. United States, 93 U.S., 442–460.

24 Scott's military contributions have been fully and sympathetically detailed by Kamm, Samuel Richey, “The Civil War Career of Thomas A. Scott” (Ph.D. dissertation, University of Pennsylvania, 1940).Google Scholar

25 Ibid., 66–71; Scott had previously negotiated a schedule of rates with non-land-grant railroads of the North, dated July 12, 1861. His position at that time enabled him to exert a great amount of influence in the formation of War Department policy concerning the compensation to be awarded railroad lines for their services to the country.

26 In a letter to Congressman William Kellogg of Illinois, Osborn reported this somber note: “I have heard one or two intimations from high state officials of the probabilities that we should go under, looking possibly to the possession of the road as a state institution, and to tell you the truth? I can't distinguish the difference between the blows of our friends and those of our enemies, for they are alike inconvenient to bear.” June 2, 1862, “Osborn Letter Book,” 111. Cent. Mss.

27 Cong. Globe, 38 Cong., 2 Sess., 1387.

28 Ibid., 291. House Executive Documents, 38 Cong., 2 Sess., VIII, No. 39.